Overcoming Wastewater Challenges in Eastern Europe
For 10 years the DABLAS Task Force helped direct European funding towards wastewater infrastructure in countries pending accession to the EU.
For 10 years the DABLAS Task Force helped direct European funding towards wastewater infrastructure in countries pending accession to the EU. Following its closure, Jaap Butter looks at what lessons can be learnt from the model in Eastern Europe and a new wastewater treatment plant and sewerage network in Siverek, Turkey.
The expansion of the European Union into south-eastern Europe provides great opportunities for the international wastewater industry. Invariably, EU candidate and other pre-accession countries are involved in a process of adjusting their environmental regulations and bringing them in line with EU directives. Huge capital investments in wastewater treatment are required - and are already being made - to ensure that treated effluent meets quality standards and water bodies are adequately protected from pollution and further degradation.
A decade ago, in November 2001, the environment ministers of the countries in the catchment of the Danube River and Black Sea set up the DABLAS Task Force, a platform for cooperation in the protection of the water ecosystems in the region.
Given the geographic spread member countries included several EU-member states and EU pre-accession countries (mainly on the Balkans) and EU neighbours alike, the latter including Georgia, Ukraine and Russia. The European Commission (EC) facilitated the Task Force as chairman of its annual meetings and by providing financing for the Task Force secretariat and for technical assistance (TA). Without attempting to give a complete history of DABLAS and its contribution to the EU approximation processes in the region, we shortly glance at three areas: the project preparation process, early pre-appraisal of project proposals and the concept of "sustainable wastewater sector development".
The project preparation process
From its early inception the DABLAS Task Force aimed at bridging the gap between the available finance and the investment needs of large public wastewater infrastructure, i.e. municipal wastewater treatment plants and related sewerage networks. Hotspots, i.e. significant sources of pollution, were tabled by member countries.
The International Commission for the Protection of the Danube River (ICPDR) and the Black Sea Commission (BSC) contributed with a scientific basis while potential loan funding was brought in by the development banks.
The DABLAS process became a "project preparation process" with its typical sequence of steps: identify the problem, define the solution and formulate a project, verify its feasibility, arrange funding and - finally – make preparations for its implementation. A set of criteria and indicators were defined, suitable to be used for checking on suitability, degree of maturity in the preparation process and readiness for implementation.
Early project appraisal
Unfortunate experience showed that many projects that entered the preparation process failed to "mature", even after considerable resources were spent on feasibility studies. It is therefore important that, already at a very early stage in the project preparation process, the potential chance of success of a project proposal is tested.
|Caution: Most water utility companies in the region provide both water supply and wastewater services. Butter advises that water supply services should be first improved before seeking investment in wastewater treatment|
For that purpose DHV developed the "DABLAS Guide on Rapid Pre-appraisal of Urban Wastewater Projects". This leads the project examiner through a series of fundamental questions surrounding the project such as: what problem does the proposed project actually try to solve? Is the project indeed the most sensible solution or are there better alternatives? Is the utility company strong enough to sustain future operations?
The aim of the rapid pre-appraisal is to determine whether a project proposal has a fair chance of succeeding or whether major modifications are necessary to make it a viable proposition. The guide has been used to test four project proposals in Serbia and Bosnia & Herzegovina.
The guide also includes a simple tool to check the project's financial viability. With the estimated investment and operation costs of the project as basis, and assuming a "reasonable" wastewater service charge to be paid by the customer, the tool estimates the required project funding, divided into foreign grants, national grants and loans.
The graph on the next page illustrates a case study of a project with two options: full wastewater treatment to remove nutrients or partial (secondary) treatment. Volumetric capacities and the size and cost of the sewerage networks are the same in both options. It shows that, with equal wastewater charges (i.e. equal revenue), the option with full treatment is very expensive and requires a very large share of foreign grant funding.
In the second option a larger amount of loan can be afforded, also because operation costs are lower than in the first option. The example illustrates the importance of a careful target-setting and sizing of a project. It also suggests that, with very high effluent quality standards, the project's financial viability may depend heavily on EU subsidy.
Sustainable wastewater sector development
An important prerequisite for sustainability of heavy investments in wastewater infrastructure is the vitality of the facility operator. A good example is Romania where, after the political changes in the early 1990s, the centralized organisation of the sector was replaced by decentralized water utility departments at municipal level.
While this move meant local ownership and a protection from continuous national political transitions, it was soon realized that the utilities were too small to invest in professionalization of their organization and to attract capital for infrastructure investments. An EU-supported reform process was set in motion, which ultimately resulted in associations of municipalities that jointly owned facilities and delegated the operation of the large utility companies to regional operators through management contracts. The sector is now operating in a sustainable manner, with stable cost recovery ratios and appropriate tariffs.
The success of Romania's evolution towards autonomous and commercially operating water services is also exemplified by lending policies of an European bank that, initially, provided loans to water utilities in Romania against a sovereign guarantee only while such loans are now offered to the utility companies directly without external guarantees. This may be a clear indicator of the increased trust of the bank in the creditworthiness of the borrower.
In November 2011, exactly 10 years after its formation, the DABLAS Task Force has been dissolved. The main reason was that, in the meantime, the project preparation capacity in member countries has improved considerably.
Also, countries such as Romania and Bulgaria (both became EU members during DABLAS' lifetime) and also Turkey and Croatia are well advanced in project implementation. Moreover, over the past several years the EC has launched various other instruments through which assistance to the region is being channelled, such as the Western Balkans Investment Framework (WBIF) and the Regional Environmental Network for Accession (RENA).
Since the Task Force DHV is now a partner in a consortium providing Technical Assistance in the implementation of the water supply and wastewater project in the town of Siverek in Turkey. The project, co-funded under IPA, concerns the construction of a new wastewater treatment plant and a sewerage network. It includes an important capacity building component aimed to restructure the town's water supply and sewerage department into a more autonomous utility company, an important prerequisite to sustain the heavy investment made.
Author's note: Jaap Butter is project leader for water at consultancy DHV. DHV's "DABLAS Guide on Rapid Pre-appraisal of Urban Wastewater Projects" is available at the DABLAS website: http://ec.europa.eu/environment/enlarg/dablas/pre_appraisal_guide_en.htm.